Mezzanine Foreclosure in Real Estate Finance: UCC Article 9, Mortgage and Intercreditor Constraints, Threshold Issues
Redefining a Commercially Reasonable Sale Based on Current Market Conditions
About the Course
Introduction
This CLE course will examine the mezzanine foreclosure process, including notice, publication, and the commercial reasonableness standard under UCC Article 9. The panel will discuss threshold issues such as property due diligence, certificated interests and UCC policies, and intercreditor agreement and mortgage loan provisions that may impact the mezzanine lender's rights and remedies.
Description
Mezzanine loans have become the preferred vehicle for subordinate financing in real estate transactions. The repayment obligation is typically secured by a perfected UCC security interest in the mortgage borrower's equity interests. Counsel should have a thorough understanding of how the foreclosure remedy is exercised under Article 9 and the mezzanine foreclosure ramifications for the mortgage borrower, mortgage lender, and other parties to the transaction.
Before commencing foreclosure, the mezzanine lender must review all relevant transaction documents, including UCC insurance policies. If the debtor "opted into" Article 8, the lender must locate the certificate. Counsel must understand the mortgage lender's rights and the rights of any senior mezzanine lenders, ground lessors, or other parties with interest in the underlying property. An intercreditor agreement will likely provide the most significant input into the timing and nature of remedies vis-à-vis other lenders.
Article 9 provides that a public sale must be conducted in a "commercially reasonable" manner, with advance notice to all relevant parties under Sections 9-611 and 9-612. The public must have a "meaningful opportunity" for competitive bidding, requiring some form of advertisement or public notice preceding the sale. The location and manner of the sale should be appropriate to allow for public access to the disposition. Also, counsel should review any recent case law construing what constitutes "commercially reasonable" to ensure compliance with any local standards at the time of the sale.
The mortgage may limit the transfer of ownership interests in the mortgage borrower to a "qualified transferee," generally defined as either the mezzanine lender itself or an institutional investor meeting specific requirements. This significantly restricts the potential universe of purchasers at a foreclosure sale, and the process of "qualifying" the winning bidder may inject uncertainty surrounding the ability of a buyer to close.
Listen as our authoritative panel analyzes these and other issues associated with mezzanine foreclosure under the UCC.
Presented By
Ms. Diamond represents commercial banks, investment funds and other institutional lenders in all aspects of the origination, purchase, sale and securitization of balance sheet and securitized (including CMBS, CLO and single asset securitization) mortgage loans, mezzanine loans, construction loans, lines of credit, subordinate notes and participation interests secured by commercial real estate properties in all 50 states consisting of all asset types including single and multi-property transactions. She has acted as program counsel for various institutional lenders, including drafting and maintaining multiple client program form loan documents and establishing programmatic process relating to loan originations for various institutional lenders. Ms. Diamond represents asset managers, institutional lenders, and servicers in loan restructuring, workouts, and foreclosures. She has prepared and reviewed offering memoranda and disclosure documents in connection with securitized mortgage loans and has also represented nationally recognized statistical ratings organizations on loan document and due diligence reviews in connection with the issuance and monitoring of CMBS ratings. In addition to being an adjunct professor teaching real estate finance law to LLM and law students at St. John’s School of Law, Ms. Diamond has implemented and participates in legal education training programs for colleagues and clients along with presenting CLEs for various industry and educational organizations. Prior to joining Riemer & Braunstein, she was an attorney at AmLaw 100 law firms for over 25 years (including 15 years as a partner).
Mr. Zimmerman supervises the UCCPlus team and participates in all of the company’s underwriting and policies. As the Chief Underwriting Counsel for UCCPlus, he reviews and evaluates transaction structure and provides feedback on the insurability of real estate mezzanine loan transactions, project finance and energy transactions, and major-market working capital and term loans. Mr. Zimmerman also advises outside counsel and major commercial lenders on UCC matters. In addition, he provides input to the Fidelity National Title Group companies on secured lending and UCC Articles 8 and 9 issues. A practicing attorney since 1982, Mr. Zimmerman is a frequent lecturer on matters involving Articles 8 and 9 of the UCC, commercial lending practices, UCC foreclosure rules and practice, and the terms, conditions and exclusions of personal property title insurance and endorsements. He is also on the faculty of the Commercial Finance Association’s Professional Education Programs.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Thursday, November 5, 2026
- schedule
1:00 PM ET/10:00 AM PT
I. Structure of a mezzanine loan: UCC security interest in the borrower
II. Steps to take pre-foreclosure
III. Due diligence: understanding terms of underlying mortgage debt, intercreditor, Article 8 opt-in
IV. Collateral besides equity interests
V. UCC Foreclosure under Article 9: commercial reasonableness standard
VI. Strict foreclosure
VII. Transfer restrictions: "qualified transferee"
The panel will review these and other critical issues:
- What level of property due diligence and title review should the mezzanine lender conduct before foreclosure?
- What provisions in the mortgage documents and the intercreditor agreement should the mezzanine lender consider before foreclosure?
- How is the commercial reasonableness standard articulated in Article 9, and what does it say about conducting a public sale?
- What additional steps must the mezzanine lender take if the borrower has opted into Article 8?
Related Courses
Mezzanine Foreclosure in Real Estate Finance: UCC Article 9, Mortgage and Intercreditor Constraints, Threshold Issues
Thursday, November 5, 2026
1:00 PM ET/10:00 AM PT
Structuring Cross-Collateral/Cross-Default Real Estate Loans
Tuesday, March 31, 2026
1:00 p.m. ET./10:00 a.m. PT
